Two significant infrastructure bills are making their way through Congress. Earlier this month, the Senate approved a $1.2 trillion “hard” infrastructure bill and will begin negotiations soon on a much larger $3.5 trillion “soft” infrastructure bill that serves as the outlines of the 2022 budget resolution.
Both measures will undergo the political “sausage making” process that could result in some changes, but with both chambers and the presidency controlled by Democrats, however, it is reasonable to expect both of them to be signed into law with few amendments.
The bills are massive (the $1.2 trillion Infrastructure Investment and Jobs Act is 2,700 pages, for example) with myriad provisions. We have highlighted just a few of those below:
- The Employer Retention Tax Credit would end on September 30, 2021, instead of December 31, 2021, as provided for through the CARES Act and the American Rescue Plan Act.
- Cryptocurrency brokers would be required to report any gains or losses, much like the required reporting of stocks and bonds. Any business that receives more than $10,000 of digital assets would also have to report such receipt, just as it must for receipts of more than $10,000 in cash.
- An automatic 60-day deadline extension period would apply to qualified taxpayers impacted by federally declared disaster.
- Various green energy provisions, such as funds available for expanding local recycling centers, are also included, which could impact businesses that are moving toward more eco-friendly goods and products.
- Fuel tax reductions that are slated to go into effect in 2022 would be delayed.
Fewer details are available for the $3.5 trillion human infrastructure plan since the actual bill has not yet been introduced in the Senate. The framework of the bill, though, does call for a number of provisions that will directly impact the tax outlook. Some of those provisions include:
- Extension of the child tax credit, earned income tax credit, and the child and dependent care credit.
- Corporate tax increases
- Tax increases on high-earning individuals
- Relief from the $10,000 state and local tax (SALT) deduction cap
- Expansion of ACA and Medicare
- Federally paid Family and Medical Leave
As stated earlier, the $1.2 trillion infrastructure bill will now be taken up by the House of Representatives. If the House approves the bill with no changes, it would proceed to President Biden for signature. Any amendments to the Senate bill, though, would need to be hashed out between the two chambers before it would proceed to the president.
Once the $3.5 trillion 2022 budget resolution is drafted, it will be formally introduced to the Senate for vote. If approved, it will follow the same path as the Infrastructure Investment and Jobs Act.
As always, we will keep our eye on developments and be in touch with you to discuss advantageous strategies.
Zachary Collins, CPA, is a Manager with our Business & Tax Advisory Group. He can be reached at firstname.lastname@example.org.